Orlando Avionics Makes Three Types of Radios for Small Aircraft-Model

question 30

Multiple Choice

Orlando Avionics makes three types of radios for small aircraft-model A, model B, and model C. The manufacturing operations are mechanized and there is no direct labor. Manufacturing overhead costs are significant, and Orlando has adopted an activity-based costing system. Direct materials costs per unit for each model are as follows:
Model A $28
Model B $32
Model C $40
Orlando has three activities-assembly, materials management, and testing. The cost driver for assembly is machine hours. The cost driver for materials management is number of parts, and the cost driver for testing is the number of units of product. Total costs and production volumes for the year 2012 were estimated as follows:
$$\begin{array} { | l | r | r | r | } \hline & \text { Total cost } & { \text { Total units } } & \\\hline \text { Assembly } & \$ 780,000 & 120,000 & \text { Machine hours } \\\hline \text { Materials management } & \$ 120,000 & 80,000 & \text { Parts } \\\hline \text { Testing } & \$ 22,500 & 5,000 & \text { Units } \\\hline\end{array}$$
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What is the allocation rate for the testing activity? (Please round to the nearest cent.)

• A) $0.67 per unit
• B) $4.50 per unit
• C) $0.22 per part
• D) $1.50 per part

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Definitions:

Predict

To declare or indicate in advance; especially, to foretell based on observation, experience, or scientific reasoning.

Score

A numerical or categorical measure that represents an individual's performance, achievement, or status on a particular task or assessment.

Effect Size

A quantitative measure of the magnitude of the experimental effect, indicating how large the difference is between groups.

Association

A connection or relationship between two or more variables, where changes in one variable relate to changes in another.